Should you invest in Nokia shares after raising its fiscal year 2021 outlook?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jul 29, 2021
  • Nokia shares surged nearly 4% on Thursday after announcing its most recent quarterly results.
  • The company reported its fiscal second-quarter results on Thursday before markets opened, beating estimates.
  • Nokia experienced growth across all business segments in Q2. So should you buy NOK shares now?

Nokia Corp (LON:0HAF) shares surged nearly 4% on Thursday after announcing its most recent quarterly results. The company released its fiscal second-quarter results before markets opened, beating analyst expectations.

Nokia posted earnings per share of €0.09 ($0.11), beating the consensus Street estimate of $0.05. Revenue for the quarter increased by 4.3% to €5.31 billion, outperforming the average analyst estimate by €150 million.

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Net sales grew 9% on constant currency from the same quarter last year after the company reported improvement across all business segments. Nokia also raised its full-year 2021 revenue guidance to €21.7- €22.7 billion, up from €20.6- €21.8 billion.

Why buy Nokia shares in Q3 2021?

Although Nokia is yet to swing to profits on a trailing 12-month basis, it seems to be getting closer. Analysts expect earnings to remain flat this year before rising by 10% next year. Furthermore, the company’s bottom line could experience an average annual growth rate of about 16.53% over the next five years, making it a compelling opportunity for growth investors.

The primary catalyst for Nokia’s growth story will be its Network Infrastructure business, which stood out in the previous quarter. The company has invested heavily in 5G networks to expand capacity as adoption continues to gain momentum.

Therefore, it could be time to buy NOK stock ahead of an exciting period.

Source – TradingView

Technical overview: Nokia stock price forecast for Q3 2021

Technically, Nokia shares appear to have recently bounced back to move closer to overbought conditions in the 14-day RSI. In addition, the stock price has remained above the 100-day moving average since crossing over at the start of May.

Therefore, the current bull run could continue through Q3, especially after a solid quarterly performance. As a result, investors will target profits at approximately $6.51, while the support level is $5.63.

Bottom line: the case for buying Nokia shares now

In summary, Nokia appears to be on a path to swing to profits after a rough 18 months. Moreover, the company’s bottom-line growth could return next year, potentially boosting the NOK price. 

Furthermore, Nokia’s current rally appears far from over despite the stock price edging towards overbought conditions. As such, Thursday’s earnings report could be a catalyst for a significant run.

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